Millennials Understand Opportunity Truly Knocks Beyond Central Denver

We seem to be in a unique environment concerning the national housing market as both buyers and sellers are excited. For sellers, record high prices are becoming the norm even in the rising interest rate environment. Buyers even though confronted with the challenging lack of inventory are strengthening the market due to confidence and the desire to lock in still historically attractive interest rates.

The above is based on the monthly Fannie Mae Home Purchase Sentiment Index® (HPSI)increased by 2 percentage points in January to 82.7, ending a five-month decline. Some of the highlights from the report include:

  • The net share of Americans who say it is a good time to buy a house fell by 3 percentage points to 29%, matching the survey low from May and September 2016.
  • The net percentage of those who say it is a good time to sell rose by 2 percentage points to 15%.
  • The net share of Americans who say that home prices will go up increased by 7 percentage points in January to 42%.
  • The net share of those who say mortgage rates will go down over the next 12 months remained constant this month at -55%.
  • The net share of Americans who say they are not concerned about losing their job rose 1 percentage point to 69%.
  • The net share of Americans who say their household income is significantly higher than it was 12 months ago rose 5 percentage points to 15% in January, reversing the drop in December.

Now concerning millennials, according to Fannie Mae research, more are purchasing and starting new households. While the Great Recession may have delayed purchases; millennials are now more confident concerning job security translating to an increased in marriages and parenthood (common during stronger economic cycles, nothing new there).

Yet of interest due to the expensive reality of city-centric residences some millennials are exploring and purchasing in the suburbs where values are generally more affordable. I have witnessed this myself concerning millennial clients looking beyond central Denver. Neighborhoods of interest include:

Southmoor Park: Lots of home and land for the spend. Also close enough to Light Rail Station at Hampden and I-25 allowing easy access to downtown and easy drive to DTC. With Whole Foods and new restaurants options on the Hampden Corridor, becoming popular.

North Englewood: Just south of the Denver border clients are looking at Englewood (north of Hampden Avenue) as a substitute for Platte Park especially adjacent to S. Broadway which continues to diversity businesses now catering to clients within their immediate neighborhood versus the traditional commuter traffic. Also a few good options for fans of Mid Century Modern who may not wish to pay the prices associated with Krisana Park.

Arvada: With neighborhoods close to the light rail line and with a new urbanism orientation, millennials are finding Olde Town Arvada has urban qualities found in areas such as Old SouthPearl, Old South Gaylord and other urban enclaves. With the easy commute to Denver via rail or car and lower prices, demand will soon outstrip supply.

Westminster: As with Arvada, the new rail line is opening up opportunities for those who desire more affordable housing, an ongoing renovation/development of a town center and easy access to the Broomfield office parks.

Edgewater: For those who have been priced out of Sloans Lake, Edgewater offers a respite within a stone’s throw geographically. With a charming commercial street, small town feel yet within easy viewing distance of the downtown skyline and a nice diverse housing stock, do not be surprised if this hidden enclaves demographics see a dramatic shift in years to come skewing towards younger buyers and families.

With this millennial flight to the suburbs what is going to happen to the inner-city? In essence the millennials are basically skipping a step i.e. usually starting in the inner-city and then moving to the suburbs for access to additional square footage, suburban schools and so forth. While these areas were once car-dependent, the expansion of RTD’s rail lines are making these suburbs once considered commuter oriented into their own attractive and thriving towns.

Yet I am far from concerned about the City of Denver. While I have some personal issues with the desire to increase density in some neighborhoods; Denver will always remain in demand due to geography, diversity of housing stock and varied amenities from cultural to financial i.e. lower water bills, low-taxes, municipal services and so forth.

My one concern for Denver is this rush to increase density. Full disclosure I am a native New Yorker thus I understand density having been raised in within an apartment building on the 20th floor and taking the subway to and from school. I am also educated as an urban planner. I view the cranes on the skyline of Cherry Creek, west of the Denver Country Club and other areas and I have three questions:

1) Is there truly longer-term demand for all the new multi-family buildings?

2) If in fact there is demand and zoning is keeping up with this demand, will our infrastructure follow suit i.e. roads, mass-transit, pedestrian corridors, dedicated bike lanes?

3) Are we remaking the inner-city of Denver unaffordable akin to San Francisco, New York, Paris, London and other cities in which the income gap is severely pronounced. These were cities which used to have a true diversity of cultures, incomes and employment and now have become playgrounds of the wealthy or long-time owners.

 

 

Is the Spring Selling Season a Bygone Memory

Historically the selling season for residential real estate in the United States was the start of Spring usually mid to late March. The timing was traditionally due to various factors including:

  • Post Spring Vacations (usually associated with families with school aged children).
  • Gardens awakening from the winter doldrums.
  • The opportunity to move and be settled prior to the school term starting in August and September.

The traditional selling season started to erode a few years ago with some markets moving to a year-round staggered school calendar, the desire of buyers to view inventory before others pounce and of course economics i.e. the most recent and severe recession forced sales regardless of season.

However it appears The Internet has upended another tradition (as it has with bricks and mortar department stores, travel agencies and others). Offering marketing and exposure 24/7 from the comfort of one’s own home; seasonal factors have suddenly become moot. Even the New York Times opined on the trend: The Right Time to Sell is Anytime.

In Denver I too have noticed this trend. One of my listings had been withdrawn from the market (and REColorado) due to the December holidays and the historical pattern of home buyers not wanting to tread through the cold and snow to look at homes.

During the holiday season and into early January I have received multiple inquiries to view the listing (of note, some sites never adjusted the asking price which was reduced). One was from a broker; their client had viewed previously. The other inquiries were what we term “buyer-direct”; prospective buyers who viewed the listing on one of various channels dedicated to real estate sales i.e. Zillow, Redfin, Movoto and others which link distribution to the REColorado service. Of interest, while the listing was technically withdrawn the distribution channels continued to promote (of note the listing is coming back on the market officially in a few days).

For buyers there may be an advantage including less competition concerning viewings and easier showing schedules. For sellers, the advantage is simply less inventory on the market. Granted the properties that will sell are those that are priced correctly for the market, show well and so forth. Thus some traditions do not change.

However if you are considering buying or selling, sooner than later may be prudent; as the saying goes “The early bird gets the worm” and avoids additional interest rate hikes.

 

 

Interest Rates Begin to Rise as Expected

For the past months I have been advising/forecasting the potential rise in mortgage interest rates. Based on the activity of the markets coupled with the Federal Reserve mandate most agreed Federal Reserve interest rates would in fact rise by December 2016 and thus impact mortgages.

Well, what a difference an election can make!

Posted on #Bloomberg News a few hours ago there has been a spike in mortgage rates: Spike in Mortgage Rates Throws Wrench into US Housing Market

We have all witnessed the increase in investment interest rates tied to the 10-Year Treasury Notes. While not getting too technical usually mortgage interest rates follow in tandem. In addition bonds from Germany, Japan and Switzerland which were in negative interest rate yields have since gone positive signaling the possibility of inflation on the horizon.

As an experienced real estate broker and one who has witnessed such cycles, now is not the time to panic or worse make a short-sighted decision; sellers and buyers have to keep the following in mind:

Rates Still At Historic Lows: even at 4 to 5% interest rates are still at historic lows. Some would argue including myself the record in home resale prices in the Denver metro area can be somewhat attributed to the low cost of borrowing also known as buy a payment regardless of the underlying value.

Some Inflation is Positive: The Federal Reserve desires a 2% inflation rate. While inflation can be a frightening term it is preferable to deflation/stagnation and recession which continues to be an issue in Japan and parts of Europe.

Time-Frame: If you plan to hold your purchase for 3-5 years and beyond with a fixed mortgage most likely interest rates will be of limited effect especially if within a conforming loan which is Denver is presently at $468,000.

Higher interest rates do in fact reduce affordability i.e. higher cost of borrowing/debt service.

Yet during periods of interest rate hikes, housing prices may remain stable or trend downward to compensate for the increased cost of borrowing.

The reality is we have been in a low-interest rate environment for way too long and some inflation may be expected and desired to balance growth and avoid another speculative bubble or similar.

My prediction is housing demand in metro Denver will slowly cool off. I believe in the upper-end of the market the pinnacle was reached during the early Spring of 2016 and since prices and demand have fallen off. I believe the rest of the market will begin to adjust to the reality of potentially higher rates and seasonal slowdown. At present the average annual income in Denver is already stretched concerning average sales price.

What will be interesting is Spring 2017. No one knows where interest rates or the economy will be. We have been in a long expansion coming from the depths of a serious recession. A cooling off is not to be unexpected and I believe welcoming as we do not wish for a repeat of the early 2000’s i.e. speculation, sub-prime mortgages and low down-payment products.

We have witnessed rental rates slowly drop due to increased supply and reduced demand. On the upper-end of the sales market prices seem to have leveled coupled with longer days on market and price reductions. Construction costs once rising seem to be leveling off as well.

Interest rates are just one indicator of the economy. It is important to look at the bigger picture, longer-term horizon and assessing the various scenarios concerning housing over the next few quarters. Historically housing matched inflation; only within the last generation have we witnessed housing as an investment vehicle and one that has outpaced inflation. Assuming business cycles have not ended, nothing to fear, just plan accordingly.

 

 

 

Metro Denver still in top cities for real estate appreciation

The newest Case-Shiller figures were released and as expected the year-over-year pace of home-resale price gains still led most others for percentage price gains. In real numbers, prices in April 2016 rose 9.5% from one year prior.  If you follow my blog you know 10% has been the average gain over the last few months when compared to one year prior.

Two cities surpassed Denver’s gain by small increments, Portland and Seattle. Of the 20 cities tracked the average gain year-over-year was 5.4%. What si more impressive and yet also possibly troubling is Denver is one of 7 cities with resale prices at an all-time high. The other cities are Dallas, Portland, San Francisco, Seattle, Charlotte and Boston.

 

As an active broker and in discussion with peers we have become a little bit concerned (and it may be a seasonal issue) of the following:

-Homes on the upper-end of the market i.e. above the FHA conventional loan amount (for Denver) of $458,850 seem to be lingering on the market for longer periods of time.

-We brokers are witnessing across the board price reductions in a few specific neighborhoods where inventory has increased exponentially versus true demand. Most of this inventory is oriented towards the luxury market.

-Potential over supply of deluxe and luxury rentals in hot neighborhoods including Cherry Creek and Downtown as well as select suburban communities which assumes the continued influx of residents proceeds unabated.

-Record low interest rates yet buyers still on the sidelines.

As a broker for 25+ years I have been though such cycles prior. We are in a goldilocks period of low inflation, low interest rates and increased supply. Yet there still seems to be a slow down in the upper segments of the market which may eventually trickle down to the larger overall market.

Metro Denver has a history of developing excess inventory during up-cycles. Coupled with the City and County of Denver desiring to increase density in established older neighborhoods there are concerns regarding quality-of-life, congestion and affordability.

With today’s news advising the Federal Reserve may begin to increase interest rates by year’s end we should see fence-sitters locking in historically low interest rates before the election. If interest rates do rise and buyers continue to sit on the side-lines we may have larger issues going into 2017.

Is there a Glut in the Denver Metro Luxury Housing Market

While stories abound concerning newer deluxe and luxury rentals starting to offer incentives to fill their units, little has been mentioned about the ownership market.

If you have driven through Cherry Creek, Washington Park East, Hilltop or Country Club you may have noticed the proliferation of real estate brokerage signs advising homes for sale. Granted we are entering the Spring season which is always a period of increased listings. However for fun I ran some statistical analysis based on our multi-list system.

At present in the Metro Area as of April 8th, 2016 there is 10,934 homes on the market. Breaking down the market by deluxe and luxury price segments for the metro area and separately the City and County of Denver:

$1,000,000+ = 1,400 Homes of which 221 are located within City of Denver

$750,000+ = 2,424 Homes of which 366 are located within City of Denver

$500,000+ = 4,651 Homes of which 740 are located within the City of Denver

Based on the above the luxury market is truly spread across the metro area with the City and County of Denver accounting for approx. 16% of the deluxe and luxury inventory on the market (a percentage I would assumed was higher as the Central City is generally the most expensive PSF real estate however the C&C of Denver does include outlying suburban markets including Green Valley Ranch and Bear Valley).

My concern is approx. 44% of the inventory on the market at present is asking over $500,000. While this number would be considered low for coastal markets, I am concerned as the average income in Metro Denver would translate to a home affordability in the mid $300’s.

Having been through multiple housing cycles during my 30+ years as a resident in Denver historically the deluxe and luxury market is the first to show signs of fatigue, a potential over-bought market, signs of weakness ahead i.e. an increase in inventory and days on the market.

While I am not expecting a serious downturn or correction I believe the deluxe and luxury market is advising us the rampant run-up in prices may be receding. I personally am seeing more listings in Cherry Creek North that last year at this time would have come on the market at $1M+ being presented at more realistic pricing. I am also witnessing a glut of larger homes in Denver’s Hilltop, Washington Park East and Country Club neighborhoods hitting the market.

Yet macro market fundamentals have not changed i.e. the stock market while running sideways seems stable, interest rates continue at historic lows and unemployment rates continue to drop. On a macro level Denver now has the lowest office vacancy rate since 1990 and our unemployment rate is the envy of may rust-belt cities.

Thus something is happening in the market and only time will tell. However if a client asks me to predict the next few months, my advice would be unless you truly love the residence, plan to reside in it for a minimum 3-5 years or its just so attractively priced, my view is sit on the sidelines if you are able.

I will be interested to look at this post one year from today.

 

 

Millennials and the Housing Market

As an experienced real estate broker I have always been intrigued by the those entering the marketplace. The Millennials (those born between the early 1980′ and the early 2000’s) are now in the marketplace for their first home as well as step-up.

At the same time, the Baby Boomers i.e. those born between 1946 and 1964 are in the process of transitioning to smaller, less maintenance dependent options as some are becoming or are empty-nesters and similar. Just look at the explosive growth of the Cherry Creek neighborhood.

Upon reviewing some industry news I came across the following statistics:

  • At present, almost 60% of the population is under the age of 55.
  • 66%+ of Primary Home Equity is owned by those over the age of 55.
  • Of the 66% noted above, 52% of them have no mortgage i.e. their homes are free and clear.
  • For those under age 55 who own a home, only 19% own their homes free and clear.

While the above should not be striking  as older folks have been in their homes longer and have experienced record equity appreciation (even when factoring in the recent recession), yet there is concern on the horizon.

Will the next generation be able to afford the homes of their parents i.e. the Baby Boomers? 

Will there be a dramatic shift in housing styles towards multifamily and other more affordable options?

While development will continue in exurban areas providing affordability will our next generation of buyers remain in the city and close-in suburbs trading affordability for convenience?

What I have noticed since the great recession is an appreciation for Denver’s inner-city neighborhoods. While the old adage will always be true it’s is all about Location, Location, Location we are witnessing Millennials change the housing landscape by gentrifying close-in neighborhoods, rejecting the notion one must be in a single-family detached home and more recently the willingness to rent in lieu of purchase even with interest rates at historic lows.

Concerning Denver I am not overly concerned as we continue to be in a healthy growth cycle, demand continues to outpace supply and in reality while not inexpensive, when compared to the coasts coupled with the lifestyle, Denver is still quite affordable with the average single-family home in the metro-area running about $300,000.

While I am not reading the tea-leaves the next decade may bring changes to the housing market. As real estate brokers, developers and investors we need to keep an eye on the millennials and their tastes and desires. As the Baby Boomers consider selling and downsizing they will have excess equity to spend i.e. vacation home, travel, investments yet will the Millennials be in line to purchase their homes and prevailing prices? And if interest rates continue to rise, the inverse may happen to housing prices, what then?

Just some commentary for conversation by the water cooler.

 

 

New Mortgage Disclosure Rules Take Effect Today

If you have purchased real estate with a mortgage in the United States you most likely were inundated with various disclosure forms prior to and at the closing. The documents included the Good Faith Estimate, Truth In Lending and a personal favorite, the HUD-1 (a dual-column page for which a magnifier glass and a dictionary should have been included).

In a nod to simplicity and less complex disclosures, the documents are being replaced. Starting today buyers will be introduced to a a simpler loan estimate and closing disclosure under the ” Know Before You Owe” program developed by the Consumer Federal Protection Bureau.

Bid farewell to the good faith estimate, two truth-in-lending forms and the complicated HUD-1. Replacing them are a simpler loan estimate and closing disclosure under the ” Know Before You Owe” program developed by the federal Consumer Financial Protection Bureau.

The immediate beneficiaries of the program are borrowers. In addition to the new forms offering a sense of simplicity, the standardization of the forms will allow borrowers to compare loan offers on an apples to apples basis. For many borrowers, interest rates and loan terms fairly competitive, the variations and added fees and closing costs are now more apparent and easy identifiable.

Yet from personal and client experience one of the new rules, i.e. the final disclosure must be in the borrow’s possession three days before closing is a benefit. The old rules required the disclosure to be provided 24 hours prior to the borrower. The new rule allows more time for scrutiny and additional time to rectify any issues.

I believe the new forms will be beneficial for all parties involved HOWEVER a few caveats:

Learning Curve: While the mortgage industry has been aware of the revisions and the original implementation was scheduled to be over the summer, the reality is there will be some confusion during the 4th quarter of the year. Thus most brokers I know are pushing contract signing to closings to 45 days for transactions inclusive of financing just to add a bit of cushion to the process.

Being Aware of the 3-Day Disclosure: This could be more of an issue for lenders and mortgage brokers as the past disclosures were due 24 hours prior to closing. Thus I am advising my clients to consider closings on Thursday or Friday to allow proper disclosure delivery during the work week.

Last-Minute Credit Reports: Historically lenders would pull a borrower’s credit report the day before or day of the closing to make are there have not been any substantial revisions. While usually not an issue as most brokers advise buyers to avoid large purchases prior to closing, a revision to one’s credit rating can in turn change the interest rate offered and any change within the 3-day disclosure restarts the disclosure clock thus adding a minimum of 3 days to the closing. In addition to the mortgage documents, the transaction contracts would have to be amended by both buyer and seller and if the transactions are contingent or stacked, there could be a domino effect.

Once all parties work with and become familiar with the new disclosure documents will be a definitive benefit to consumers. Yes the learning curve will be steep and I would assume over the next few weeks there will be delayed closing (and full disclosure I am attending a closing on Friday 10/9 representing a family member as their Attorney-In-Fact and I hope not to be delayed).

Most brokers I know have become familiar with the new disclosures and subsequent documents as many of us have taken classes concerning the revisions during the Spring assuming a summer implementation. As a broker I am pleased as explaining a Hud-1 was always a challenge (even with reading glasses) and having the 3-days prior to review, allows me to take clients to lunch and review documents versus a quick coffee and a highlighter.

Additional Links for your review:

Loan Estimate Explainer

Sample Closing Disclosure Explainer

Home Prices Continue to Rise in July 2015, Denver Still Hot

The most recent statistics presented by the S&P/Case-Shiller 20-City Index rose 5% in July. The more representative and inclusive National Home Price Index rose 4.7%.

While the statistics represent the height of the summer season and before the recent downturn within the stock market, overall the news is positive for the real estate marketplace. San Francisco and Denver have both registered the greatest increase in pricing on a year-over-year basis.

Specifically for Denver the home price index rose 0.71% for the month, 3.16% for three months and 10.26% on a year-over-year basis as mentioned above (San Francisco registered a 10.41% year-over-year gain). Yet as a real estate broker and one who not only considers home ownership not only a lifestyle choice but also as part of a diversified investment portfolio.

Thus I went digging into the numbers concerning the annualized returns for Denver as follows:

3-Years: 8.86%

5-Years: 5.88%

10-Years: 2.30%

The above statistics while some would consider bleak makes one step back and consider timing one’s purchase. I for one have been concerned with the low interest rate environment which I believe in turn has pushed housing prices up i.e. purchasers are making decisions based on the monthly payment and not underlying value. Yes, appraisals can be viewed as a safety valve but the reality is an appraisal takes a 6-month look back and does not predict future returns.

Yet I find the statistics above actually quite positive. First, those who purchased within the last 3-5 years have enjoyed an increase in valuations from the lows of the last recession. Yet even those who purchased within the last decade i.e. during the height of the market, values are still positive and technically continues to outpace inflation. Coupled with tax advantages and a roof over one’s head regardless of statistics for many home ownership is a positive option.

What is the take-away? While I am concerned about double-digit annualized growth, most would agree such gains is just not sustainable over the long-term. Assuming the Federal Reserve does raise interest rates during the 4th quarter of 2015, while the actual increase may be minimal the psychological effect may impact home purchases. While interest rates will remain historically low the perception of higher interest rates in the future may impact sales prices with downward pressure as an inverse to higher borrowing costs.

As I have mentioned in past blogs, inventory is moving assuming it is priced accordingly. For those homes with above market prices activity is slower. Yet if priced correctly and if buyers can see a potential upside in 5+ years those homes are moving quickly.

I will be watching the index measurements for August and September to see if my anecdotal view of a slight slow turn translates into actual statistical validation.

The Data is In Home Sales are Slipping

While the popular press has not indicated downturns in the housing market; in discussions with real estate peers we have collectively witnessed a slowdown in sales, contracts signed and cancelled and an uptick in inventory.

In our local Denver market we were blaming what we perceived was a slow-down on sellers being too aggressive concerning listing price, buyers hesitant to commit while interest rates were in flux and seasonal factors i.e. schools generally being their Fall classes in August. Yet new data suggests our perceptions may be reality.

U.S. home resales fell more than expected in August, According to The National Association of Realtors existing home sales dropped 4.8 percent to an annual rate of 5.31 million units.

Economists polled by Reuters had forecast a 5.51 million-unit pace of home sales last month.

One bright spot, sales were up 6.2 percent from a year ago most likely due to the continuing strengthening of our national economy and continued historically low interest rates.

According to Lawrence Yun, the NAR’s chief economist “The decline in August might be due to rising prices shutting out potential buyers”. Home sales fell most in America’s South and West, areas which had recently seen the fastest price gains, he said.

Nationwide, the median home price fell slightly in August to $228,700. That was still up 4.7 percent from a year earlier, but left the year-over-year rate at its lowest since August 2014. Prices in the West were up 7.1 percent from a year earlier.

I concentrate on the inner-city neighborhoods south and east of downtown Denver. I have witnessed an uptick in listings and residences staying on the market for longer periods of time HOWEVER I have also noticed once the asking prices are adjusted to reflect overall market conditions versus the hysteria of Spring 2015, units are going under contract and closing.

An example are two listings one block north of my personal residence:

One listing was purchased one year ago for approx $415K. While the new owners embarked and completed minor capital improvements, nothing extravagant to the level of a total fix and flip or similar. The home re-entered the market at $595K. While showings were above average (I consider healthy and average, 3-4 showing/week), no offers. Once the price was adjusted downward to approx $575K, the home went under contract including an inspection resolution requesting a new roof.

Across the block, two row houses sold within the past year for between $525K and 550K. Suddenly one comes on the market at $600K+ with less square footage than its peers. After being on the market for a few weeks the asking has been reduced yet still above the comps from the past 6 months.

I always advise both buyers and sellers to look at both comps in the neighborhood and the individual property’s history. While I believe in obtaining a profit, 30%+ gains in 1-2 years sans major capital improvements is questionable even in a hot market. In addition if financing is being considered, one must consider the appraisal which looks back not forward.

While I am not concerned about a potential bubble or impending downturn, I do believe we will witness an overall seasonal slowdown concerning inventory over the next quarter. Coupled with the potential fr a rise in the Fed Funds rate which will impact mortgage rates, I am assuming prices will stabilize and may even adjust downward from this past summer.

We must remember, in Metro Denver we have had a significant run up in prices over the last few years partially based on coming off a bottom coupled with purchases based on a monthly payment and not overall valuations. I for one welcome the opportunity to return to a more balanced marketplace where housing prices match or exceed inflation by small margins, that to me is a rational housing market.

Happy Monday.

August 2015 Metro Denver Market Overview

Digging into the August MLS stats:

6,416 New Listings came on the market.

5,383 homes were placed under contract.

5,088 homes Sold and Closed.

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The DMAR Market Trends Committee releases reports monthly, highlighting important trends and market activity emerging across the Denver metropolitan area. Reports include data for Adams, Ara pahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson and Park counties. Data for the report was sourced from REcolorado® (August 2015) and interpreted by DMAR.

At the end of August we closed out the month with:

7,587 Active Listings which represents a 1.57% increase over the previous month, which was still 6.55% less than we had available in August 2014. Thus inventory continues to lag behind demand, a seller’s market.

One of the issues is the significant decrease of 15.53% in new listings of detached Single Family Homes. This is not necessarily uncommon as August is less of a month of transition as seasonally there is a marked decrease in inventory hitting the market during the last quarter of the year.

Finally the Average and Median Sold prices remained relatively unchanged from the previous month at -0.23% to $410,525 and -0.21% to $349,250 respectively.

Now we all await the decision by the Federal Reserve concerning the Fed Funds Rate. While the jury is still out concerning trends, I am one of the few brokers who feels a rate increase is good. Yes, such an increase may lead to higher interest rates for mortgages and conversely prices for homes may adjust slightly downward. However most of my peers agree the market may be a bit over-bought and low interest rates are letting buyers purchase based on monthly payment versus underlying value.

An increase in interest rates by the Federal Reserve usually means inflation may be on the horizon. In general controlled inflation i.e. 2% annual is an overall positive for housing prices. Even with a 25 basis point interest rate increase, mortgage interest rates will continue to be historically low.